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Parents, child service provider group sue DCS over subsidies

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In a one-two punch, a pair of lawsuits filed a week apart in December hit the Indiana Department of Child Services square in the gut over how the agency planned to reduce payment rates for foster and adoptive parents and juvenile service providers.

The suits have been combined in the U.S. District Court for the Southern District of Indiana into a single piece of litigation that raises questions about how these per diem subsidy changes are calculated and what impact they could have on the overall child welfare and juvenile justice system.

Led by the American Civil Liberties Union of Indiana and the Indiana Association of Residential Child Care Agencies (IARCCA), the cases both named as defendants the DCS and Director James Payne, a former juvenile judge in Marion County. The suits represent more than 100 agencies statewide and could potentially impact a class of foster and adoptive parents throughout Indiana.

But the case ties in with a broader picture that goes beyond the per diem payment rate changes that were set to go into effect in 2010 and those within Indiana's juvenile justice system say the DCS decisions could potentially have a detrimental effect on both the juvenile and adult criminal justice systems. They claim the policies and decisions being made are jeopardizing effective treatment services and consequently tying judges' hands by reducing their options in doing what's best for children and families.

"This is very concerning because we must provide enough services so that we can, as judges, make reasonable efforts to reunite families and provide the services to children who need it," said Marion Superior Juvenile Judge Marilyn Moores, who pointed out she wasn't familiar with the two cases but has concerns after hearing about the issues. "Any disruption in the provider community is very concerning to judges because our concern is if there will be reasonable services available. If there's not, that jeopardizes what we do."

At issue in the now-combined lawsuits are DCS funds received and allocated under Title IV-E of the Social Security Act, which says the state must make foster care maintenance payments for qualified children to cover food, shelter, clothing, daily supervision, personal incidentals, liability insurance, and reasonable travel to the child's home for visitation. Federal law requires that the rates be sufficient to cover those costs, and in exchange for that payment the state DCS receives federal matching funds to cover part of the costs for those services to children.

In setting rates during the past two years, the DCS has scaled down any increases and frozen the rates paid to service providers as budget woes worsened for Indiana. By October, the expected cut for service providers was at 10 percent but it changed by Nov. 30 to between 14 and 20 per- cent with a stern warning from DCS that any provider that didn't agree to the rates within two weeks would have children in their care transferred to other providers.

For foster and adoptive parents, DCS sent a letter in early December notifying them that their monthly payments would be reduced by 10 percent starting Jan. 1, no matter when the placement or adoption took place.

That set the stage for the litigation, and when that DCS-imposed deadline for rate agreements came, the lawsuits began.

Service providers sue


IARCCA, an association of about 110 child welfare agencies providing services to about 4,600 children statewide, filed the first suit in Marion Superior Court Dec. 14. The focus is on the rate cuts announced earlier that month by DCS for agencies providing foster care placements and intensive residential treatment for abused and neglected children. Within two weeks it was removed to federal court, and IARCCA continued its efforts to stop DCS from implementing payment cuts it describes as arbitrary and based solely on budget concerns.

Specifically, the suit cites examples of those cuts, including: Indiana Developmental Training Center in Lafayette and Indianapolis, which services up to 64 and 96 kids respectively and would have to cut even more than the 29 positions already eliminated in both locations; and the Christian Haven residential provider in Jasper County, which expects to eliminate 40 positions including therapists and employees who provide direct care to children.

The suit makes three claims against DCS: It violated Indiana Code 4-22 by not setting reimbursement rates according to promulgated rules; it violated Title IV-E by not offering any written criteria or methods about rate changes and adequacy of what's proposed; and the agency violated the Section 1983 provision of the U.S. Constitution by acting under color of state law in setting arbitrary rates and violating the federal rights of IARCCA and its member agencies.

DCS declined to comment for this story because of the pending litigation, though spokeswoman Ann Houseworth said the agency hopes for a quick resolution and looks forward to continued partnerships with all those committed to the welfare of Indiana's children. After the cuts were announced in early December, DCS Director Payne issued a news release.

"These are incredibly difficult deliberations and everyone involved recognizes the magnitude of the decisions made," he said. "Like other state agencies and business entities, we have spent countless hours trying to find ways to reduce expenses and be good stewards of tax dollars while providing safe, quality care for children... The rate reduction, while unfortunate, still keeps Indiana foster care rates higher than most states."

IARCCA hit the DCS with its first blow within two weeks of the announcement. A second blow came a week later.

Parents follow suit


On Dec. 22, the American Civil Liberties Union of Indiana filed suit on behalf of two adoptive and foster families, with a combined total of nine children who are at the heart of the case. A motion for class certification has been filed, seeking to expand the case for any foster parents who are or will receive foster care maintenance from the DCS, and any current or future foster children for whom any payments are to be made through the DCS.

The lawsuit claims Payne and DCS failed to conduct individual assessments of families and the cost of providing for foster and adoptive children before deciding on the cuts, which will reduce adoption and foster care subsidies so much that parents won't be able to provide for the children's needs.

Both DCS cases have been consolidated, as they deal with similar issues and the same agency decision. A preliminary injunction motion filed Dec. 29 asks the court to stop the state from being able to initiate the reductions while the litigation is ongoing, and a hearing is scheduled for Jan. 20. A class certification request is also pending before the court.

Impact


While DCS litigation plays out in court, those in the juvenile justice and child welfare system are concerned the payment changes for foster and adoptive parents will cause more to turn away from these necessary roles, giving the courts and child welfare workers even fewer options for protecting children. Others see this as another piece in a larger puzzle of problems in the DCS in recent years as the DCS has gained more control of the juvenile justice system.

Judge Moores said she fully understands the financial pressures the state and DCS are under but that those monetary concerns can't be the underlying basis for these decisions.

"That was always the fear skeptics had about the DCS making the calls," she said, referring to controversy about the DCS having final say on out-of-state placements. "I fully understand the financial pressure the state is under, but if lower reimbursement rates drive providers out of business, there's a concern that there won't be appropriate services for families and kids.

"I don't know what the answer is," Judge Moores said, "but I certainly hope the best interests of children will remain the primary guiding force."

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